B-2-03, Master Property Insurance Requirements for Project Developments (02/14/2024)

This topic describes additional requirements only applicable to servicers. Refer to Selling Guide B7-3-03, Master Property Insurance Requirements for Project Developments for property insurance requirements for project developments, including

• determining if a master property insurance policy is required,
• coverage requirements,
• determining the required coverage amount,
• deductible requirements,
• special coverage requirements for project developments,
• special coverage requirements for condo projects,
• builder/developer property insurance policies, and
• policies covering multiple projects.

The servicer must ensure on an annual basis that the master insurance coverage maintained for a PUD, condo, or co-op project meets the requirements outlined in this Servicing Guide.

Refer to Selling Guide B7-3-07, Evidence of Property Insurance for acceptable evidence of master insurance policies. Acceptable evidence of master insurance coverage for a unit in a PUD, condo, or co-op project includes either:

• a copy of the current master policy and any endorsements, and a certificate of insurance showing the individual unit securing the mortgage loan is covered under the policy;

• a blanket insurance policy which covers every project in which the servicer services Fannie Mae mortgage loans, with premiums borne by the servicer as a corporate expense; or

• an insurance policy maintained by the servicer which provides ”walls-in” coverage as well as loss assessment coverage as needed in the event of an uninsured loss for all Fannie Mae PUD, condo, or co-op mortgage loans serviced by the servicer.

In accordance with Selling Guide A2-1-03, Indemnification for Losses, the servicer must indemnify Fannie Mae in the event that the servicer's use of an insurance product does not provide sufficient coverage. In no event shall a servicer's obligation to Fannie Mae thereunder be limited to the amount of coverage in force under an insurance product that it has selected or obtained.